The individual tax liabilities in a business partnership
A partnership company doesn’t pay taxes on the business’s income. That responsibility is divided among the individual owners.
Which forms you need to file
Partnerships are considered pass-through entities. That means that any income or losses are passed through the partnership to the individual owners, who are then responsible to account for that income or loss on their income tax returns. However, the partnership is required to file IRS Form 1065. This is an informational partnership tax return submitted annually that reports the earnings, losses, deductions and credits from the partnership. The partnership itself must also issue a Schedule K-1 to each individual owner so that they can report and pay their share of the partnership’s tax liability.
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